Agriculture Committee on Feb. 26th, 2008

[The Chair, Conservative, James Bezan]

I call this meeting to order

I want to welcome all of you here to continue our study of Bill C-33, a bill enabling the government to set up our mandate on biofuels.

I want to welcome to the table today Roger Samson, executive director of Resource Efficient Agricultural Production Canada, or REAP Canada; and from Rothsay we have Todd Moser. From the Canadian Vehicle Manufacturers' Association we have Mark Nantais; and from the Canadian Petroleum Products Institute we have Gilles Morel and Gene Carrignan. Welcome to the committee.

I ask that all witnesses make their opening comments in ten minutes or less. I will hold you to that, since we have a tight agenda today.

With that, I'll open it up to you, Mr. Samson.

[Roger Samson, Executive Director, Resource Efficient Agricultural Production (REAP) Canada]

Thank you very much, and good morning, everyone.

If you want to get out our brief, it's in the briefs that have been circulated to you. Actually, we have revised this and added some references, so a new brief will be coming to you.

Basically, REAP Canada is a research and educational organization that's been working since 1986 on sustainable agriculture and, more specifically, on biofuel development in Canada since 1991. We released the most recent report on greenhouse gas mitigation from biofuels in Canada last month, and that brief is called “Analyzing Ontario Biofuel Options: Greenhouse Gas Mitigation Efficiency and Costs”. There were seven authors on that report, and we would like the committee to review it in detail to better understand the biofuel issues.

There are two things that make a good biofuel: that it's very efficient at displacing greenhouse gases, and that's it's cost-effective for the Canadian taxpayer.

If you look at figure 1 in my brief, you'll see the life-cycle greenhouse gas emissions for production of bioenergy fuel technology by energy-use sector. We compared three sectors: the transport sector, the green power sector, and the green heat sector. You'll see that in terms of greenhouse gas emissions, the heating sector and the green power sector are more efficient at reducing greenhouse gases. They have lower emissions.

If you go to figure 2, you'll see that on a percentage basis. You'll see that corn ethanol, according to our report, is 21% efficiency in terms of a greenhouse gas offset and biodiesel is about 50% to 58%.

In Europe, they've created a biofuels standard where the EU must show that they generate at least 35% less greenhouse gas than gasoline and cannot come from land with a recognized high biodiversity value. So corn ethanol would not be eligible in the European Community, whereas if you look at green power and green heat, you have offsets of 80% to 90%.

So what makes a good biofuel? A very good offset makes a good biofuel, and the second criterion is its cost.

If you look at figure 3, you will see we've done the pricing. We examined the federal and provincial subsidies available in the province of Ontario, and we looked at the offset efficiency of those fuels. What we saw was that biodiesel is about $100 a tonne in terms of mitigation costs and corn ethanol in the province of Ontario, with current incentives, is $375 a tonne.

If you look on the right side of that chart, you'll see there are options available for about $50 a tonne in quite a number of technologies, including one we've worked on, which is growing grass, pelletizing it, and using it as a thermal fuel offset.

If we scan through to page 9 of the brief, in table 1 we see our fuel analysis in terms of net greenhouse gas offset of renewable fuel. How can we use an acre or a hectare of farmland to offset greenhouse gases efficiently? We've shown the offsets here: about 900 kilograms from soybean biodiesel per hectare; corn ethanol, 1,500 kilos; cellulosic ethanol, 4,700 kilos; and switchgrass pellets, 13.5 tonnes per hectare, eight to ten times more efficient than corn ethanol as a strategy.

We're inviting anyone in the Canadian scientific community to challenge these numbers. We're very confident in these numbers, and we don't understand why the Canadian government isn't embracing more efficient offset technologies.

In our recommendations for the committee, we have three major concerns about this legislation. The first is that it won't appreciably reduce greenhouse gas emissions. We've been told that 4 million tonnes of offsets could be expected. If you run the numbers from our recent report, we find the numbers only come up to 2.1 million tonnes—almost half of what the government is saying to Canadians.

Secondly, we think a serious land conversion problem is going to occur, because Canada doesn't have the land base to grow that fuel. We're going to have to either import it or turn our grasslands into arable croplands, and that's going to release large quantities of greenhouse gases. Several scientific reports came out last month, and they talked about 50- to 130-year paybacks for that land. So this is not going to reduce greenhouse gas levels at the levels that are proposed. We do not believe that's going to happen.

Thirdly, it's not a made-in-Canada solution, because Canada largely will import the corn to make this ethanol. And in terms of biodiesel, it's just too expensive. Canola biodiesel today is $1,000 a tonne, and it's $1,300 a tonne for soybean oil. These do not make economical biofuels. The incentives that are available today for the federal government are not going to make it in terms of the 2% blend.

The legislation does not demonstrate fiscal responsibility. Carbon dioxide offsets, as you saw from the charts on corn ethanol, are in the order of six to ten times more expensive than other options.

We recommend three things that the government should do. The government should implement results-based management strategies throughout its research and incentive programs to ensure that the desired outcomes of greenhouse gas mitigation and rural development are achieved. We think the environment can be a winner, farmers can be a winner, and taxpayers can be a winner if we develop effective policy, but we don't have an effective policy framework today to address the carbon dioxide problem.

The second point is the government needs to embrace perennial energy crops and abandon the use of annual crops as biofuels. It should be recognized that there's a limited surplus arable land base in Canada, and the main opportunity for biofuels is from our perennial landscapes. Use our farmland that's marginal and grow biofuels like switchgrass for pellets.

The third point is that the government needs to embrace parity in terms of the way it's applying incentives to the biofuel sector. The Canadian government should not pick winners. There's a joke that governments pick winners but losers pick governments. Really, what we need to do is embrace carbon dioxide pricing as a means to create an effective strategy to reduce carbon dioxide. We would like to see Agriculture Canada expand its research in the use of whole-plant lignocellulosic perennial crops. Currently there's a deficiency in research funds in this area, and we would really like to see that strengthened.

Thanks very much.

[The Chair, Conservative, James Bezan]

Thank you.

Now we have Mr. Moser, from Rothsay.

[B. Todd Moser, Vice-President, Alternative Fuels, Rothsay]

Mr. Chairman, members of the committee, thank you for giving me the opportunity to appear before you this morning to share my insights on Bill C-33, an act to amend the Canadian Environmental Protection Act, 1999.

I come to you today as someone with over twenty years' experience in the refining, supply, distribution, and marketing of conventional petroleum products in Canada and as vice-president of Rothsay, a proud member of Maple Leaf Foods and a pioneer in Canada's biodiesel industry. I trust that my practical and commercial experience in both conventional and alternative fuels will be beneficial in today's proceedings.

I would like to impress upon the committee two messages today: first, that alternative fuels like biodiesel hold many benefits for Canada and Canadians; second, and more importantly, that quick passage of Bill C-33 is critical if we are to realize any of these benefits.

Renewable fuels like biodiesel can benefit Canada and Canadians in three ways. First, renewable fuels can address the growing challenge of climate change. Climate change is real, and the environmental consequences of being addicted to carbon-based fuels are a key source of the problem. Renewable fuels like biodiesel can help address these issues by offering substantial environmental benefits over conventional carbon-based fuels. In the case of biodiesel, the environmental benefits are many.

According to Natural Resources Canada, biodiesel greenhouse gas emissions reductions are 70% to 95%, depending on the feedstock. Even a blend of 20% biodiesel with conventional diesel can reduce carbon emissions, on a life-cycle basis, by over 15%. Our Sainte Catharine's plant alone helps eliminate approximately 122,000 metric tonnes of greenhouse gases annually, which is equivalent to taking 16,000 light trucks or 22,000 cars off the road.

Biodiesel is as biodegradable as sugar, and is ten times less toxic than table salt. Biodiesel also has a very positive energy balance. In fact, a new analysis conducted at the University of Idaho in cooperation with the U.S. Department of Agriculture shows that the energy balance of biodiesel is a positive 3.5 to 1, which is to say that for every unit of fossil energy needed to produce the fuel over its life cycle, the return is 3.5 units of energy. This compares very favourably relative to conventional petroleum diesel, which yields less than one.

Second, renewable fuels like biodiesel help address the issue of energy diversity. The $100 per barrel for crude oil is more than enough reason to look at renewable alternatives as a means to diversify our reliance on carbon-based fuels. Not only have crude oil prices climbed but product prices are also at record levels. Over $3 a gallon in the U.S. and $1 per litre in Canada is now commonplace thanks to an aging refining network, minimal spare capacity, and ever-increasing product specifications.

In their most current medium-term oil market report issued in July of 2007, the International Energy Agency, a well-respected source of energy information worldwide, forecasted increasing market tightness beyond 2010 due to OPEC's spare capacity declining to minimal levels by 2012.

In the same report, they indicate that energy demand is not receding any time soon. Expanding economies, particularly those in non-OECD countries--for example, in Asia and the Middle East--are forecast to grow their oil demand by 3.6% per year over the next five years. This is clearly a recipe for continued upward price pressure on both crude oil and petroleum products in the foreseeable future.

Renewable fuels like biodiesel can help diversify our energy supply by adding additional supplies and production capacity for clean, renewable alternatives that are fully compatible with today's engines, can meet the highest product standards, and can be easily integrated into our distribution infrastructure. What's more, these fuels are available now.

The third major benefit of renewable fuels is their positive impact on the Canadian economy. Our Sainte Catharine's facility in Quebec is proof positive of what even a modest investment can mean to local communities.

In terms of employment, we are proud to offer employment opportunities for professionals, skilled and semi-skilled individuals. We have over 25 people directly involved in our biodiesel business. We also spend over $800,000 per year on local services to support our operation and over $15 million will be spent acquiring domestically produced feedstocks.

Our plant contributes to the local tax base supporting municipal, provincial, and federal taxes. In 2007 we also completed a major capital upgrade of the facility and utilized local trades and services during the fabrication, construction, and commissioning phases of this project.

A strong domestic biodiesel industry establishes new markets and price stability for oilseed crops and animal by-products, while diversifying and strengthening rural economies. Clearly these three benefits--the impact on our environment, energy diversity, and the economy--are positive for Canada and Canadians. However, these will not be realized without quick passage of Bill C-33.

Bill C-33 is imperative if Canada is to foster a strong domestic renewable fuels industry and market. Make no mistake, Bill C-33 and a renewable fuel standard will not see appreciable demands in Canada for renewable fuels, which in turn will not contribute to the relatively small investment needed to our supply infrastructure to accommodate these cleaner renewable fuels.

We already see this now, with almost all of our 35 million litres of production from our Sainte Catharine's facility going directly to foreign jurisdictions that have much more developed renewable fuel programs. Today in Canada we have but two commercial-scale biodiesel facilities, while our neighbours in the U.S. have over 130, with another 37 under construction. What's worse is the significant gap that exists for consumers who want to use biodiesel. I'm aware of only two product terminals in Canada that can effectively blend biodiesel, and fewer than a handful of fueling facilities that actually offer biodiesel to consumers.

Quick passage of Bill C-33 will change this by creating the catalyst needed to secure investment in biodiesel plants and the necessary infrastructure to get this clean renewable fuel to consumers. Should Bill C-33 fail to pass, I'm certain that future investment in biofuels will be seriously impaired, if not outright abandoned. This is certainly the case for my organization, which would like to expand our biofuels business but is reluctant to do so, not knowing if a market will even exist in Canada.

In summary, I believe renewable fuels hold great promise and benefits for Canada and Canadians. They address climate change, improve energy diversity, and have an opportunity to add to rural development and Canada's economic growth. Quick passage of Bill C-33 will provide the catalyst needed to spur investment and to help Canada realize the many benefits renewable fuels have to offer.

Thank you for your time and attention.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Moser.

With the Canadian Vehicle Manufacturers' Association, Mr. Nantais. The floor is yours.

[Mark Nantais, President, Canadian Vehicle Manufacturers' Association]

Thanks very much, Mr. Chairman.

Good morning to all the members of the committee. I want to thank all of you for this opportunity to address you today as it relates to Bill C-33.

The Canadian Vehicle Manufacturers' Association is the lead national association that represents Canada's light- and heavy-duty vehicle manufacturers, including Chrysler, Ford, General Motors, and International Truck and Engine Corporation. Together, these companies account for over 70% of all domestic vehicle production, 55% of all vehicle sales, and our member companies support 150,000 Canadian workers and retirees throughout their entire business operations.

Very quickly, I can say that I'm here to lend our unconditional support for Bill C-33 and call for its passage as quickly as possible. You may be surprised, but I think there are many organizations that feel the same way about the quick passage of this bill, and I'll tell you why. The CVMA strongly supports a comprehensive renewable fuel strategy that is backed by appropriate regulation. Efforts to expand the availability and use of quality blended renewable fuels in Canada provide an opportunity to significantly reduce greenhouse gas emissions from the vehicle fleet.

The government has rightly and justifiably acknowledged the advantages of renewable fuels from a life-cycle greenhouse gas perspective in its Canada Gazette notice on renewable fuels, in 2007. This is the first time that the government, under the Canadian Environmental Protection Act, is requiring that a component be added to Canadian fuels.

We believe that the real opportunity exists to ensure success in the marketplace by addressing both the fuel quality and consumer acceptance of these green fuels. Ensuring a seamless and successful deployment of renewable fuels in the Canadian marketplace is critical for the long-term confidence in and acceptance of these fuels by Canadians.

Furthermore, due to the innovative nature of the industry across North America and the Government of Canada's stated commitment to common North American vehicle emission regulations, it is important that the Canadian and U.S. approaches on renewable fuels be consistent, at least to the extent possible.

Since the 1980s, all gasoline-fuelled vehicles produced by CVMA member companies are capable of running on fuels containing up to 10% ethanol. Our members are also industry leaders in providing E85 flexible fuel vehicles. These are vehicles that can run on 100% gasoline, all the way up to 85% ethanol, which is totally transparent to the driver. In addition, our diesel-fuelled vehicles may also operate on biodiesel blends, per manufacturers' recommendations.

It is essential that renewable fuels, both the bio-renewable component and the conventional fuel component, meet appropriate fuel quality standards. Failure to assure fuel quality can result in potential negative effects relative to criteria emissions, suitability for use in extreme cold or hot weather, adversely affect the operation of the vehicle, or could affect the vehicle fuel and emission systems themselves. Accordingly, the bill needs to expressly stipulate the fuel quality requirements to ensure that appropriate and consistent biofuels are available across Canada where they may be offered.

It is also important to acknowledge and recognize the nature of vehicles and fuels as a fully integrated system. That's certainly a concept or a principle that is already acknowledged and accepted in CEPA itself, and now in Bill C-33.

The following issues need, in our view, to be addressed to ensure a successful implementation of renewable fuel regulation whereby it meets the government's stated renewable fuels objectives and environmental improvements. The first issue is fuel quality requirements as expressed in the context of a national fuel quality regulation; second, controls and management of implementation and transition issues related to ethanol storage, compatibility, tank cleanliness, and water management; and third, expansion of the availability of high-level ethanol and gasoline blends, up to 85% ethanol.

I would also like to offer a few comments on the rationale for a federal fuel regulation. A national fuel quality regulation for conventional and renewable fuels would address the developing patchwork of provincial actions to date. We encourage the federal government to work closely with the provinces during the drafting of the legislation and the regulation to ensure consistency and one national approach for Canada covering both renewable fuels and the overall fuel quality, recognizing certain regional and seasonal factors.

It is our understanding that under section 140 of CEPA, the minister has the authority to make regulations that specify fuel quality parameters. CEPA 1999 indicates that regulations that are enacted related to fuels need to show that they do not adversely affect the environment, human life or health, or the operation, performance, or introduction of combustion and other engine technology or emission control equipment.

Therefore, in our view, a practical approach for renewable fuels would be to reference the fuel quality specifications contained in the applicable Canadian General Standards Board or American Society for Testing and Materials standards in a manner similar to that approach taken by the Province of Ontario in its regulation 535, which is their ethanol regulation. This will ensure consistency of fuel quality across the country and demonstrate the government's commitment to ensuring that renewable fuels are implemented in a manner that improves the environment but also avoids any adverse effects or impacts on Canadian vehicle operation, not to mention showing federal leadership in this area.

Although the Canadian General Standards Board, CGSB, is recognized as a credible standard-setting body, their fuel standards have not been consistently adopted or implemented as provincial regulatory requirements across Canada. Currently gasoline quality parameters developed by the CGSB are regulated by three provinces, I believe, quasi-regulated by another, and are partially cited by reference in another, so there is no provincial legislation requiring that all on-road fuels meet current applicable CGSB standards.

A further example of CGSB not being adopted and implemented across Canada is the gasoline detergent specifications. Environment Canada data on deposit control additives indicates that approximately 20% of Canadian gasoline does not contain any deposit control additives that are necessary to minimize fuel system deposits that can lead to increased emissions and affect vehicle performance. I might add that the auto industry and the oil industy are working together on this issue and making improvements in this area to ensure that there is total satisfaction for our mutual customers.

Given this, we believe that a national fuel quality standard as part of the renewable fuels regulation is necessary to address such shortcomings now and in the future.

I'd also like to comment on controls and management of the implementation and transition issues with ethanol storage, compatibility, tank cleanliness, and water management. The use of ethanol in gasoline is permissible at concentrations up to 10%. Due to the nature of ethanol and gasoline blending, the motor vehicle industry suggests that efforts need to be undertaken to minimize co-mingling effects with gasoline that could lead to increased fuel system vapour pressure, increased VOC emissions, and possible vehicle driveability issues.

Significant environmental benefits from high-level ethanol blends--that is, up to 85% ethanol, 15% gasoline--can be realized by taking full advantage of the E85 flexible fuel technology that my vehicle manufacturers have made available in Canada for nearly a decade. The NRCan GHG Genius model shows that E85 fuels, on a life-cycle carbon dioxide emissions basis, can be reduced by 47% to 55% compared to conventional gasoline. One way to minimize issues related to infrastructure, distribution, and management of ethanol blends is to mandate or incentivize a portion of the 5% ethanol objective to be supplied as E85 fuel.

In addition, if Canada is to aspire to increased levels of ethanol use in Canada, as have leading jurisdictions such as Sweden, the U.S., and Brazil, then this will require the use of E85 flexible fuel technology as well as the associated infrastructure that goes with it. Supportive government policy must be given serious consideration in this area. By expanding the availability and use of clean and renewable fuels, government can not only assist consumers but actually accelerate greenhouse gas reductions in Canada.

I'd like to offer a couple of more comments.

In 2007 the CVMA member companies announced and launched a realistic, integrated approach to accelerate greenhouse gas reductions in Canada. Our plan focuses on accelerating the introduction of green technology, expanding cleaner renewable fuels, removing older polluting vehicles from Canada's roads, greening environmental fleets, and changing driver behaviour.

While we are already making progress in some of these areas within the industry's control, we require the support of the federal government and provincial governments to achieve even greater success. For instance, we would suggest that we create a Canadian tax credit incentive similar to the United States alternate fuel infrastructure pump conversion initiative. The United States has a tax credit support model, which provides up to $30,000 per retail pump conversion to E85. Second would be to reinstate the excise fuel tax exemption for E85 fuel. Third would be to continue to support the purchase and use of flex fuel vehicles by governments and private fleets. And the fourth is to continue the existing supporting mechanisms for conventional ethanol and provide additional focus on cellulosic ethanol production in Canada.

Mr. Chairman, I just want to summarize by saying that Bill C-33 is a critically important component to a broader integrated approach to reducing greenhouse gas emissions and achieving our environmental goals, and we hope it will be passed as quickly as possible.

Thank you.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Morel and Mr. Carrignan. Who is leading off?

[Gilles Morel, Director, Eastern Canada Division and National Office, Canadian Petroleum Products Institute]

Mr. Chair, Members of Parliament, and to Canadians who have access to this hearing, on behalf of the members of the CPPI, thank you for inviting us to offer our perspective on Bill C-33, the statutory framework that will permit the enabling of a national renewable fuel regulatory framework in Canada.

Right away, like the three speakers before me, I wish to express our association's support for Bill C-33. As you know, the CPPI is the national association of major Canadian companies involved in the refining, distribution and marketing of petroleum products for transportation, home energy and industrial uses. There are three key points that we wish to highlight with you as you consider Bill C-33.

Firstly, CPPI believes that the only sensible approach to renewable fuel mandates is one that is national in scope. Secondly, CPPI has worked hard with the Canadian Renewable Fuels Association to develop a national approach. Thirdly, CPPI is dedicated to leading-edge research on fuel quality specific to the realities unique to Canada, such as weather and geography.

Canada is a country with immense geography, a relatively small population and an economy fundamentally linked to, and in our case, competitive with the United States.

Movement of product free of economic barriers has been the cornerstone of Canada's success, and as all levels of government focus on how to remove internal trade barriers it is regretful that policies in provincial jurisdictions regarding renewable fuels have had the effect of creating new economic barriers across Canada.

As can be seen on the chart presented in the document, a patchwork of regulation is emerging across Canada. The second chart shows where the main refining centres are located. What is not shown here is that as we speak, there are recent proposals from Ontario and British Columbia to follow in the footsteps of California and introduce further another layer of complexity called the low-carbon fuel standard. The goals are unclear.

One of the benefits of Bill C-33 is that a national framework will emerge, and we congratulate the Parliament of Canada on recognizing the importance of showing federal leadership.

Secondly, regarding the essential feature of a national policy on renewable fuel, CPPI understands the many motivations that underlie public policy attention to renewable fuels. More important, let's remind ourselves that this framework cannot achieve this on its own. While countries like the United States pursue renewable fuel policy based on energy independence and security, this is not the case in Canada, nor is it likely to be the case in the near term. Canada has an abundance of natural resources that with some stewardship and innovation will provide both energy security and value-added jobs and economic growth for the benefit of all regions of Canada.

A national renewable fuel strategy is also not a panacea for the challenge posed by climate change. It may be one day, but for the moment I think we can agree that scientists, engineers, health practitioners, and modelling experts are still working on the real solution to climate change, and we are ready partners in that research.

So why have a renewable fuel mandate? At the very least, it is instructive that the House of Commons has referred this very important piece of legislation to the Standing Committee on Agriculture and Agrifood. As stated in our jointly agreed policy framework with the Canadian Renewable Fuels Association, we have repeatedly taken the position that it is up to government to make the political decision to develop a renewable fuels policy that is in the best interests of Canadians.

Mr. Chairman, Bill C-33is but one building block that will bring a sound renewable fuels framework to fruition. The agenda ahead, if we are truly to succeed, is laid out in our CPPI-CRFA framework, which is attached for your information.

Basically, the framework calls for five things: federal leadership; a competitive environment; technology advancement; policies that induce the ability of renewable fuels to drive down GHG emissions; and open borders.

I wish to inform parliamentarians that the federal government, in the budget, sent some very confusing messages about renewable fuels.

On the one hand, very generous programs will be in place as of April 2008 to provide production subsidies. One of the federal government's announcements concerned the ecoENERGY for Biofuels Initiative, which will invest up to $1.5 billion over nine years to boost Canada's production of biofuels.

Unfortunately, in the 2007 budget, the Excise Tax Act was amended to repeal the tax exemptions for renewable fuels.

In fact, the government brought in a higher tax rate for biofuels. Over the same period of time as the ecoEnergy program, the government has cut $1.5 billion that would otherwise have been used to keep the cost of bioblended fuels in line with regular gasoline and diesel fuel.

From where we stand, this translates into no net new investment in biofuel production.

As has been demonstrated in the U.S., a federal blenders' credit is the preferred method of supporting ethanol production. The equivalent of Canada's federal blenders' credit terminates on April 1 of this year, but in the absence of a comparable arrangement with our largest trading partner, we will fall short of expectations that renewable fuel in Canada will easily compete with the same product south of the border.

Mr. Chair, Mr. Gene Carrignan, chair of the national association, will now conclude our presentation.

[Gene Carrignan, Chair, National Fuels Committee, Canadian Petroleum Products Institute]

Mr. Chair, the last component of our presentation deals with real-time work on biofuels.

In meeting the needs of this policy, we are conducting leading-edge research. On January 22, 2008, Canada's largest cold-weather on-road demonstration of renewable diesel was officially launched in partnership with CPPI, the federal and Alberta governments, and a diverse multi-stakeholder group including Climate Change Central, the Canola Council of Canada, and the Canadian Renewable Fuels Association.

Over 60 trucks of various sizes have hit the roads throughout Alberta, because its climate poses some of the most extreme challenges to renewable diesel use. The demonstration will provide hands-on cold-weather experience for fuel blenders, distributors, long-haul trucking fleets, and drivers. We are proud to be part of this group of stakeholders, working to broaden the understanding of how best to maximize the benefits of renewable diesel in Canada.

In addition, we are working with Natural Resources Canada and Environment Canada on a second proposed biofuel research program. It is designed to understand and address issues with biofuel mixtures under specific Canadian climate conditions. Its design will include low-temperature operability of heavy-duty engines, fuel storage for multiple applications, and thermal and oxidative stability of heating fuel oil under seasonal variations.

The picture in our handout shows a unique cold-weather chamber in Sarnia that will be used in this work. In fact, from this meeting we'll be going directly to another to continue the design of that program.

In summary, Mr. Chair, we at CPPI have some bottom lines that are not negotiable. First of all, we are the face of energy providers at the consumer level. We've heard from producers; we are the ones who actually get the customer complaints if something malfunctions.

We make the necessary investments to meet the public policy objectives on a grand scale. At our core, our collective mission is to ensure that we provide to Canadians the fuels that perform as expected in a safe and reliable manner and that we cooperate actively with government and society to pursue science-based solutions to health and environmental priorities. Our track record in this regard is quantifiable.

Moreover, CPPI seeks to ensure that our collective workforce will convey respect to, and strive to earn the confidence of, the many constituencies members serve, and that Canadians will continue to enjoy the widest variety of fuel choices in a rigorous, competitive market.

As stated earlier, CPPI supports Bill C-33 and encourages its adoption by Parliament. In fact, we want the necessary renewable fuels regulations to be in place as soon as possible, so that we, as the companies that must comply with this policy, have sufficient time to implement the necessary changes to our operations.

We're happy to take your questions.

[The Chair, Conservative, James Bezan]

Thank you very much. Thanks to all of you for staying within your time limit.

We have only about 15 minutes left, but I think we'll go around once; every party is able to ask one five-minute question.

Go ahead, Mr. St. Amand.

[Lloyd St. Amand, Liberal, Brant, ON]

Thank you very much, Mr. Chairman.

Thank you, gentlemen, for your presentations this morning.

I'm particularly pleased to see you, Mr. Nantais, to again spread the message that contrary to any perception or myth out there, Canadian vehicle manufacturers are leading; they are cutting-edge, and they have been manufacturing energy-efficient and environmentally appropriate vehicles for a considerable period of time. Thanks for coming today and reinforcing that message for us.

[Mark Nantais]

It's my pleasure.

[Lloyd St. Amand, Liberal, Brant, ON]

A few of you have spoken about it, but I will address the question to you, Mr. Nantais. It is about the need for federal fuel regulations to avoid a patchwork of regulations among the provinces and territories--a patchwork that, as I understand it, is happening now or is the case now.

You've alluded to the Province of Ontario and its recent regulation. Was that just a “for instance”, or is the Ontario approach something your association, and perhaps Mr. Morel's association, would be advocating?

[Mark Nantais]

I think it's both, Mr. St. Amand. I think it's an approach in which they were able to comprehend the need for fuel quality, as it relates to the biofuel component. So it's one we have used as an example, that it can be done.

There were some concerns at the outset about fuel contamination, which could cause potential driveability issues, which could represent a safety factor for a motorist who was, for instance, merging into high-speed traffic where, if you had bucking and stalling--as a result of contamination of the fuel--that would pose a real problem.

I'm pleased to say that when we worked with the oil industry and the Government of Ontario, we were able to get over some of these issues, and to the best of my knowledge we have not seen any examples of fuel contamination that would result in a problem like that. So I would use it as an example.

[Lloyd St. Amand, Liberal, Brant, ON]

Mr. Morel and Mr. Carrignan, or anyone else, do you have any additional comment?

[Gilles Morel]

Let me just comment.

I support what Mr. Nantais has just said. I think at the end of the day, it is important that our association recognizes, as the Canadian Vehicle Manufacturers' Association recognizes, that we ultimately need to satisfy the needs of the customers. So it is important that we have essentially good, comprehensive fuel quality across the country that will be fit for the purpose of our members. So to this extent, the Ontario experience--and I could expand even to Saskatchewan, which has had a mandate for a while, and to Manitoba--are good examples where, with proper discussion, with good regulation, and with consultation with the industry, good things could happen and good things could be achieved. We certainly encourage those discussions--with the participation of Environment Canada--after the passage of that bill.

[Lloyd St. Amand, Liberal, Brant, ON]

If I may, do you pronounce your name “Moser”?

[B. Todd Moser]

It's Moser, yes.

[Lloyd St. Amand, Liberal, Brant, ON]

What is the reaction in your industry to the carbon tax imposed the other day by the government of Gordon Campbell in British Columbia?

[B. Todd Moser]

There were no elaborate discussions within the industry group. Certainly speaking for our operation, it is definitely an intriguing component of why we're potentially in this business, because it all links back to the benefits that can be accrued by using biofuels and trying to diversify our energy needs away from carbon-based fuels. It's really seen as another opportunity to accelerate how we get to that point.

[Lloyd St. Amand, Liberal, Brant, ON]

Lastly, I'll turn to Mr. Samson.

You spoke maybe less enthusiastically about Bill C-33 than some of the others. Would it be conceded by you, Mr. Samson, that Bill C-33 is at least a step in the right direction? Even if it's a baby step, in your view, is it not at least a step in the right direction?

[Roger Samson]

The trend is that everybody wants to see a greener environment. The question I have is is it necessary to go to two and five right away, or could we go to one and two, and then step up after that, go step by step?

I consider this to be risky from an ecological standpoint and from a food security standpoint, that Canada is potentially contributing to increasing food scarcity in the world, and that we have record prices for wheat today. We have, as I mentioned, soybean oil at $1,300 a tonne and we have the lowest amount of grain we've ever had in stock to feed the population we have. It's 54 days. That's a record low. So why do we want to take a leap of 5%, 4.5 million tonnes of corn? We don't have the land base. Why not take a smaller step, and move the legislation ahead a little bit later? We'd be comfortable with that. But two and five? We'll have serious ecological problems, and I think it needs a scientific assessment that's more detailed. Then we need to go a bit slower than we're going.

[The Chair, Conservative, James Bezan]

Thank you. Your time has expired.

Monsieur Bellavance.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Morel, I'm not sure it's such a good idea to come before the agriculture committee and tell us how fortunate farmers are, compared to others, to pay such high prices for their fuel. We hear from farmers every day and we know that they are feeling the effects of rising production costs, particularly fuel costs. I really don't think it is appropriate to say that farmers are fortunate to see fuel prices advertised at $1.25 a litre, at a time when we are trying to further reduce our dependence on this energy source. In that respect, Bill C-33has the advantage of developing a renewable energy framework.

You also stated in your presentation that providing subsidies for renewable fuel was not your preferred option. It is rather odd to hear this from a person representing an industry that received in the neighbourhood of $1 billion in tax breaks in 2007. We know how much the Conservative government likes the oil companies. Your presentation was hair-raising, to say the least.

[Gilles Morel]

Mr. Chairman, I would like to answer the first question concerning the fact that we are here to support Bill C-33. We have the same concerns as farmers. Not only are they our clients, they are our biofuel suppliers as well. We believe that we must strive for maximum harmonization, so that distribution and production costs remain as competitive as possible, along with consumer costs. What I mean by this is that we need harmonization of standards and biofuels on a national level. Federal government leadership which this bills hints at is one of the main reasons why we are here today.

Regarding your second question, let's just say that I represent an association of downstream petroleum companies. The CPPI represents oil refinery operators and distributors, as well as marketers. As a matter of policy, we do not support subsidies. In our presentation, we made it clear that as a result of recent policies, only one transfer of funds was made to boost biofuel production, in contrast to the measures taken in the United States, for example. Consequently, the lack of comparable arrangements will make the job much more difficult in future.